Federal Government Introduces New Bill to Combat Corporate Crime

On Wednesday (6 December 2017) the Federal Government introduced the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017  (the Bill) into the Senate. According to the government, the Bill is intended to tackle the fact that "corporate crime" hurts Australian business and Australia's international reputation and economic well being - the damage is estimated as a cost to Australia of around $8.5 billion every year.

The Bill primarily amends the Criminal Code Act 1995 (Cth) and the Director of Public Prosecutions Act 1983 (Cth) to "enhance the tools available to law enforcement to tackle corporate crime" - several other Acts are also affected by amendments, namely the:

• Administrative Decisions (Judicial Review) Act 1977
• A New Tax System (Goods and Services Tax) Act 1999
• Crimes Act 1914
• Income Tax Assessment Act 1997.

Background

As the Explanatory Material to the Bill indicates, Australia has been a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Anti-Bribery Convention) since 1999. The Anti-Bribery Convention obliges parties to criminalise the bribery of foreign public officials and implements a range of related measures to make such criminalisation effective. As part of this, Australia has given effect to its obligations through the "foreign bribery offence" in section 70.2 of the Criminal Code (the Code), which already carries significant penalties for individuals and companies. The offence in its current form poses challenges for typical cases of foreign bribery, which may involve the use of third party agents or intermediaries, instances of wilful blindness by senior management to activities occurring within their companies and a lack of readily available written evidence. These are matters the Bill seeks to deal with.

Changes Made by the Bill

Schedule 1 of the Bill proposes to amend the Criminal Code Act 1995, the Schedule of which contains the Criminal Code, by amending Division 70 of the Code which deals with the bribery of foreign public officials.

Section 70.2 of the Code, the offence of bribery of a foreign public official, is amended to remove undue impediments to successful investigation and prosecution of foreign bribery offending. Generally, this is achieved by broadening the offence, removing unnecessarily restrictive requirements and clarifying some requirements. Main changes to the existing offence are:

• the definition of "foreign public official" is extended to include a candidate for office;
• the requirement that the foreign official must be influenced in the exercise of their official duties is removed;
• the requirement that a benefit and business advantage must be "not legitimately due" is removed and replaced with the concept of "improperly influencing" a foreign public official and factors instructing the determination of this concept are part of the amendments; and
• the existing offence of covering bribery to obtain a personal (that is, a non-business) advantage is extended.

A new offence of "failure of a body corporate to prevent foreign bribery by an associate" is introduced. The body corporate would be liable where the associate committed the bribery for the profit or gain of the body corporate. The offence would not apply if the body corporate had in place adequate procedures designed to prevent the commission of the foreign bribery offence by its associates.

The Income Tax Assessment Act 1997 is consequentially amended to ensure the continuation of the existing policy of prohibiting a person from claiming a deduction for a loss or outgoing the person incurs that is a bribe to a foreign public official.

Schedule 2 of the Bill implements a Commonwealth Deferred Prosecution Agreement (DPA) scheme. A scheme by which the Commonwealth Director of Public Prosecutions (CDPP) can invite a corporation [DPAs are not available to natural persons] that has engaged in serious corporate crime to negotiate an agreement to comply with a range of specified conditions. Where a corporation fulfills their obligations under the DPA, it will not subsequently be prosecuted in relation to the offences specified in the DPA. In the case of a breach of the terms of a DPA the CDPP may commence prosecution or renegotiate the terms of the DPA with the corporation. DPAs are only available under a specific set of serious corporate criminal offences.

The DPA scheme is meant to assist in the detection and addressing of serious corporate crime, by encouraging corporations to self-report misconduct by offering greater certainty of outcome when compared to litigation, and an opportunity to avoid some of the reputational and financial costs associated with lengthy criminal investigations and trial processes. It should be noted, DPAs are not available to natural persons, the scheme being designed to apply to corporations.

The scheme aims to enhance the accountability of Australian business for serious corporate crime and support improved corporate culture. Terms included in a DPA will require a party to a DPA:

• to admit to agreed facts detailing their misconduct, 
• pay a financial penalty to the Commonwealth and 
• disgorge profits and other benefits obtained through the conduct. 

It is also likely that a DPA will typically require a corporation to implement or improve a compliance program or policies, and cooperate in any investigation 
relating to the matters specified in the DPA (including any investigation against individual company officers).

The Bill contains safeguards to ensure that the DPA scheme does not apply to corporations who have engaged in serious corporate crime. 

DPAs will not enter into force until they been independently assessed by an "approving officer", an appointed former judicial officer. The Bill also requires that the Director of the CDPP must be satisfied that entering into a DPA is in the public interest before submitting a DPA to an approving officer for consideration. 

What's Next

The Bill is awaiting Second Reading Debate in the Senate when Parliament returns in 2018.

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Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 and Second Reading Speech and Explanatory Materials as reported in the TimeBase LawOne Services.

Tough new measures to combat corporate crime (Minister for Justice - Media Release)